The measures they use to say the economy is ‘good’ have one thing in common: they fail to account for value whatsoever.
They account for value in dollars, that’s true. But they fail to account for value in any sense that matters: the usefulness of a product or service on the one hand and the labor that produces it on the other. Instead, we look at wages, employment rates, profits, and prices. Those are admittedly easy to quantify and play around with, but they aren’t really anchored to anything meaningful.
For example, let’s say your company makes on-the-go smoothies, sold in grocery stores and convenience stores. You’ve got a quality product: a relatively thick smoothy with quality ingredients and a good variety of purees and juices. You product isn’t cheap, but that’s because you use quality ingredients, pay your employees a fair wage, and use reasonable labor practices in your bottling plant. As a result, people love your product and enjoy working for your company. Soon you come to take up a prominent position on shelves, because your regular customers will reliably buy up your stock.
Now let’s say you do an IPO. Once the board members have sway, they want to iron out some of these ‘inefficiencies’ in your company to increase their profits. First, they come for the ingredients. You wind up with fewer purees in smaller proportions, a greater proportion of inexpensive juices, and the most expensive ingredients dropping off the list entirely. Your loyal customers are annoyed that their smoothies aren’t as thick, but it’s still better than the other options, so they keep coming.
At your bottling plant, wages start to stagnate. Benefits aren’t eliminated, but a new management technique is introduced in which hours are spread out to make it difficult to meet the minimum to qualify. Shifts begin increasingly running on skeleton crews as hours are spread thinner. Of course, the same amount of work still needs to be done, so the employees are doing two to three times as much work as they used to.
Long-term employees who once made the company what it was start to see the change and look for other options before things get worse, leading to a fresh generation of new employees with no clue how much better the company used to be.
At the end your profits are up, employment is up, and you’re selling just as much or nearly as much of your product as you were before. If you only look at the numbers, it seems like this whole endeavor was a fantastic win for your company.
Except you’ve just made the world a little worse. The market presence you earned with your high-quality product no longer has an equivalent product taking it up, degrading the real value of the market itself. Employees are running themselves ragged making a perhaps flat or slightly rising wage per hour, but a wage that’s actively diminishing in terms of the labor required to earn it and the purchasing power it comes with.
Now what happens when you take this model and project it to the entire economy?
All the numbers say record profits, low unemployment, stocked shelves full of high-demand products. And yet the reality is that we have to work more to pay for less of shittier and shittier products. Even the people who win don’t really win, because they make a worse world for themselves where they can’t get a good smoothy.
The whole thing is a mirage that we’ve been killing our society chasing.